Release Date: February 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Superloop Ltd (ASX:SLC) reported a 63% increase in total customers, reaching over 664,000, driven by growth in the consumer segment and successful migration of Origin customers.
• Revenue for the half increased by 31% to $258 million, with underlying EBITDA growing at a faster rate, reflecting strong operating leverage.
• The company achieved a significant reduction in net loss after tax, narrowing to $7.8 million, an improvement of $10.9 million from the prior period.
• Superloop Ltd (ASX:SLC) successfully increased its NBN market share by over 50%, ending at 6.3% of the market as of December 31, 2024.
• The acquisition of Uicom is expected to expand infrastructure reach and support continued growth, adding substantial scale to domestic infrastructure.

Negative Points

• The business segment experienced flat revenue growth due to sector-wide price erosion on corporate data products, offsetting volume gains.
• Operating expenses increased by 12.4%, largely driven by a 21.6% increase in marketing investment, although returns on this spend were positive.
• The company continues to operate at a net loss, although it has narrowed compared to the previous period.
• Price erosion in the business segment is expected to persist into the second half of FY25, impacting revenue growth.
• The integration of the Uicom acquisition is expected to be neutral in terms of net EBITDA and cash contributions within the first year, setting modest expectations during the transition.

Q & A Highlights

• Warning! GuruFocus has detected 1 Warning Sign with ASX:SLC.

Q: Can you confirm the number of Superloop branded NBN subscribers added in recent months? A: We added 18,000 net Superloop branded NBN subscribers in November and December. The doubling of the run rate mentioned refers to the wholesale business, not consumer. (Paul Tyler, CEO)

Q: How is the company handling price erosion in the business segment, and what is the outlook? A: The price erosion is due to a market shift from dedicated networks to internet-based networks with cloud applications. This transition is a one-time event, and we expect the impact to diminish by the end of FY25, with some residual effects in FY26. (Paul Tyler, CEO)

Q: Can you elaborate on the AI use cases within Superloop? A: We have implemented a chatbot named Teddy, which has diverted significant chat volumes from human agents while maintaining customer satisfaction. Other AI applications include self-help for network challenges and sentiment analysis. (Paul Tyler, CEO)

Q: What is the impact of the NBN's push to higher speeds on Superloop's consumer segment? A: Any market changes, especially those focusing on high speed, benefit us as high speed is our focus area. We expect to perform well as customers transition to higher speed tiers. (Paul Tyler, CEO)

Q: What are the company's plans regarding M&A, and what types of businesses are you targeting? A: We are looking at opportunities across consumer, business, and wholesale segments that align strategically and are appropriately priced. We prefer to miss targets rather than make a bad deal. (Paul Tyler, CEO)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.